Read the Daily Forex Trading Analysis

Today’s US Dollar Trading
• USD gets hammered
• US data ignored in favor of rising Oil
• Equities pressure USD/JPY

Overnight Preview
• Look for continued weakness
• USD likely to fall overnight

Looking Ahead to Friday
All times EASTERN (-5 GMT)
• 8:30am USD Core PCE Price Index m/m
• 8:30am USD Personal Spending m/m
• 8:30am USD Personal Income m/m
• 9:55am USD Revised Michigan Sentiment

Summary
The Greenback got hammered today as panic hit the equities markets; Crude Oil passes the $140.00/BBL mark and makes a record close. In my view, this is exactly what the USD needs to reach back into new 2008 lows. If you notice, the USD has been over 5% weaker earlier in the year against Yen and CHF while it is stronger against EURO and GBP; I think it is time to remember that panic doesn’t pay. Look for the USD to drop significantly during the early part of the next quarter but let’s not lose focus; the USD will bottom and recover at some point and with equities this cheap you can bet SWF money will be all over the bid on choice stocks soon. That repatriation will make a firm bottom in the USD this year late in my view. On the day, Cable found a top at the 1.9890 area; high print at 1.9897 tracking EURO higher all day. EURO found stops above the 1.5700 area as expected but also found more above the 1.5750 area stalling at a high print of 1.5766 and remaining firm all day. Both EURO and GBP had willing bids all day and saw lots of dip buying; despite good selling by Asian sovereigns overnight. USD/JPY finally broke under the 107.00 handle finding stops in good size at the 106.90 area; low prints 106.60 making a new two-week low. Forex traders note that volumes were good and trade was orderly suggesting that there were quality bids on the break as well as quality offers. Traders expect further losses near-term to close out the quarter. USD/CHF is under the 1.0230 area for a low print at 1.0219 making a mess of the bull’s balance sheets; expect further losses to end the week. In my view, the USD has broken into expected lows and the big question is if the USD can continue to fall; I think that is a slam-dunk given the high price of Oil. Look for the USD to fall overnight on follow-on selling. No US data tomorrow of note so expect continued pressure during the day and for the USD to finish the week somewhat lower.


EUR/USD Daily

Resistance 3: 1.5820
Resistance 2: 1.5800
Resistance 1: 1.5780
Latest New York: 1.5761
Support 1: 1.5620
Support 2: 1.5580
Support 3: 1.5550

Comments
Rate powers higher on Oil, stops and general USD weakness. Stops above the 1.5700 handle; more stops over the 1.5750 and 1.5780 area but offers will likely cap any further strength near-term. Asian sovereign selling seen overnight. US news today likely to create volatility so be ready for whipsaw or a reversal. Should cable break—EURO could go with it. Watch for model accounts on the bid today or Friday. The 50 bar MA likely to offer support should the rate fall back; close over the 50 bar likely to draw more buying to end the week. Bids will likely be in the 1.5580 area or so on any meaningful correction. Expect higher action this week as late shorts get squeezed.

Data due Friday: All times EASTERN (-5 GMT)

All Day EUR German Prelim CPI m/m
4:00am EUR Current Account
5:00am EUR Consumer Confidence
12:30pm EUR ECB President Trichet Speaks


USD/JPY Daily

Resistance 3: 109.00
Resistance 2: 108.80
Resistance 1: 108.50
Latest New York: 106.71
Support 1: 106.40
Support 2: 106.10/20
Support 3: 105.80

Comments
Rate finally breaks as expected, OK to add on the close for additional weakness. Exporters noted on the offer the past 24 hours and the rate breaks below 107.00 with authority. Failure to close above the 108.00 handle Monday a good sign rate is ready to break back to the lows looking for stops under the 107.10/107.00 area. Exponential reversal signal still valid, rate is two-way but weaker each day. If short—let it work. If today’s US data is weak, expect a pullback again to test support. Look to add if rate can hit the stops in the 107.00 area near-term. Some topping seen; expect volatility. USD likely not this strong but more benefiting from Yen weakness. Stops likely rolled up under the 107.00 area for today so if a break happens—look for a drop to the 106.00 handle fairly quickly.

Data due Friday: All times EASTERN (-5 GMT)


Analysis Provided by: Forexpros.com written by Jason Alan Jankovsky.

Also Check the Forex brokers section.

DISCLAIMER:
Trading Futures and Options on Futures and Cash Forex transactions involves substantial risk of loss and may not be suitable for all investors. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge, and financial resources. You may lose all or more of your initial investment. Opinions, market data, and recommendations are subject to change at any time.

Daily Forex Analysis

Overnight Asia/Europe
• USD starts firm, weakens into Europe
• Stops triggered on the way down
• Traders report good volume

Today’s Economic Reports
All times EASTERN (-5 GMT)
• 9:45am USD Chicago PMI

Looking Ahead to Tuesday
All times EASTERN (-5 GMT)
• 10:00am USD ISM Manufacturing Index
• 10:00am USD ISM Manufacturing Prices
• 10:00am USD Construction Spending m/m
• Tentative USD Domestic Vehicle Sales
Expect ISM to remain weak.

Summary
The USD started Asia on the defensive as most of the major pairs rallied again to new near-term highs against the Greenback; Cable and EURO finding previous resistance a bit tougher to break and stalling at previous monthly highs. Cable high print at 1.9968 roughly in line with previous highs in the same area from late April and reversing to go negative on the day shortly after the European open. Disappointing UK mortgage approvals put the pressure on Sterling again and the rate made lows just ahead of the US open at 1.9894. EURO made a high print in Asia at 1.5837 before reversing along with GBP; low prints in early New York at 1.5745 before light bids supported the rate off the lows. Both GBP and EURO are tracking each other as cross-spreaders continue to work the Yen side of the crosses; speculation is high that the Yen will continue to weaken against most pairs but today appears to be a profit taking day as the reversals are in all Yen crosses.USD/JPY was pressured into new monthly lows completing a reasonable fib retracement target for a low print in Europe at 104.98 before bids were seen and a short squeeze resulted. The rate has recovered to the 105.60 area in light trade as New York gets underway. Stops reported at the 105.50 area on the way down and again on the way up suggesting late Forex traders are getting whipsawed. USD/CHF dropped in tandem with other USD weakness falling to a low print at 1.0130 before a short squeeze took the rate back over the 1.0200 handle; traders note that across the board in all pairs stops were elected from what appears to be the late USD long. That being said, the probability of additional volatility and likely recovery now that the stops have been run is higher; aggressive traders can look to short EURO above the 1.5770 area and take gains on the Short USD/JPY and USD/CHF positions around current pricing if still in from the weekend. Although the trend is lower for the USD I expect a lot of potential volatility this week and the next thing is to re-short on strength if we get it. Look for the USD to rally into previous resistance across the board and we can re-short it there. Today’s PMI data likely to inspire a bout of volatility.

EUR/USD Daily

Resistance 3: 1.5900
Resistance 2: 1.5880
Resistance 1: 1.5830/40
Latest New York: 1.5768
Support 1: 1.5720
Support 2: 1.5680
Support 3: 1.5650

Comments
Rate not supported by higher Oil today suggesting a near-term top. Stops noted under the previous lows layered under 1.5700 traders say. Closes near the 1.5800 handle from last week, more upside likely but a pullback is needed. Asian sovereign selling seen overnight. US news today likely to create volatility so be ready for whipsaw or a reversal. Should cable break—EURO could go with it. Watch for model accounts on the bid today; those guys love to buy highs. The 50 bar MA likely to offer support should the rate fall back; close over the 50 bar likely to draw more buying to end the week. Bids will likely be in the 1.5580 area or so on any meaningful correction. COT data show a flip to EURO longs; could be a clue for a top.

Data due Tuesday: All times EASTERN (-5 GMT)

3:55am EUR German Unemployment Change
5:00am EUR Unemployment Rate

USD/JPY Daily

Resistance 3: 107.80
Resistance 2: 107.20/30
Resistance 1: 106.50
Latest New York: 105.56
Support 1: 10500/104.90
Support 2: 104.50
Support 3: 104.20

Comments
Rate continues on follow-on weakness, strong bids noted suggesting a whipsaw bounce is coming. Today’s dip under the 105.00 handle lacked conviction and a potential rally may develop early; sell that rally early next week if we get it. In the meantime, OK to liquidate shorts and wait. Exponential reversal signal still valid, rate is two-way but weaker each day. Stops in the 105.80 area cleared overnight; traders note stops were both ways. Cot data show a flip to Yen longs suggesting a bottom is in.

Data due Tuesday: All times EASTERN (-5 GMT)

7:50pm JPY Monetary Base y/y

Analysis Provided by: Forexpros.com written by Jason Alan Jankovsky.

Also Check the Forex brokers section.

DISCLAIMER:
Trading Futures and Options on Futures and Cash Forex transactions involves substantial risk of loss and may not be suitable for all investors. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge, and financial resources. You may lose all or more of your initial investment. Opinions, market data, and recommendations are subject to change at any time.